O’Farrell has a shot at setting up targets

It barely got a mention at this week’s budget day but NSW Premier
Barry O’Farrell
’s 10-year plan to rebuild the worst-run state in Australia is arguably the first time business accountability techniques have been applied to ­government in an integrated and credible way.

This could mark a turning point in the way government departments deliver services and manage their performance. The plan is structured to encourage the more efficient delivery of government services by providing incentives for co-operation between ministers and the heads of departments.

The state now has a strategic plan similar to those in place at every major Australian company. The NSW 2021 Plan includes 32 goals and 180 priority targets. Many of the targets are quantitative and they can be tracked to ensure accountability.

The state’s senior public servants will have their performance measured against the achievement of the targets laid out in the plan. The key performance indicators used to assess their pay will be linked directly to the plan.

O’Farrell is trying to hardwire his policy objectives into the running of departments and the setting of budgets. The real test of the 2012 Plan will come in next year’s budget when the goals and priorities are integrated into government spending programs.

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This week’s budget was an out-of-cycle exercise that could not include most of what is in the 10-year plan, which has been worked on by O’Farrell’s head of transition to government, Peta Seaton.

The strategic plan was born out of meetings held with the members of the shadow cabinet last year under the guidance of a few management consultants with deep experience in working with companies and not-for- profit groups. But the first thinking occurred in 2009.

O’Farrell was determined not to repeat the mistakes made by Labor which had a shot at a similar exercise in 2006 under then premier
Morris Iemma
.

Iemma forced the heads of all NSW government agencies to sign contracts with new performance targets relating to their portfolios. This was in response to community ­concerns about inadequate services.

Iemma set 14 key social, economic and environmental goals for the state, with priorities in health, crime, public transport, water and climate change.

But his good intentions were derailed by successive leadership changes and the culture within the NSW Labor Right of making government policies in a knee-jerk fashion in response to the demands of radio shock jocks and newspaper campaigns on crime and transport.

Iemma’s plans evolved into a ­brochure with no accountability.

The worst aspect of this debacle was the disillusion and confusion in the ranks of senior public servants. Departmental heads, known as directors general, were told they would be accountable for specific targets. Then suddenly they found themselves being loaded up with different goals and priorities as ministers responded to polls and reactionary commentary.

O’Farrell’s team are adamant goals and quantitative targets are not the same as the rubbery objectives put forward by Labor. Preserving his credibility, however, will depend upon the transparency of the measurement tools provided on the 2021 Plan website.

The plan includes five strategies: rebuild the economy, return quality services, renovate infrastructure, strengthen local environment and communities and restore accountability to government.

The plan was not developed in isolation from the public service.

Over the past two to three months, Seaton has worked with the directors general to get professional advice on the targets. This consultation process involved changes to some priorities.

The previous government’s commitments to the Council of Australian Governments will be maintained as well as other agreed national reforms.

The plan is designed to encourage co-operation between the clusters of government agencies that sit under the nine primary ministers in the NSW government. The idea is that the various ministers overseeing the agencies in each cluster will work in a collegiate fashion to meet the goals in the plan.

While there is consensus in business that the industrial relations pendulum has swung too far from Work Choices in the Fair Work Act, few chief executives have put forward ways to lift productivity other than getting more flexibility in wages and conditions.

Telstra
chief executive
David Thodey
broke new ground yesterday when he said that a critical factor in lifting productivity would be greater use of technology as an enabler.

But he lamented the lack of co­operation in the industry. “We are not collaborating in any way at all," he said during the Charles Todd Oration in Sydney. “I think we have gone backwards."

He called on businesses in information and communications technology (ICT) to collaborate with each other, government entities and state and federal ministers to get innovation back on the policy agenda. Thodey, who has been around long enough to remember when ICT was a sexy topic in Canberra, says that when he goes to the nation’s capital nowadays, he never hears it mentioned.

He cannot remember the last time all the major players in the ICT industry got together to discuss policy and develop a collaborative plan.

Thodey said the industry, including Telstra, was to blame for the lack of co-operation in the national interest.This was one reason Telstra had given
Hugh Bradlow
the additional role of head of innovation on top of chief technology officer.

He says the industry has to stop talking in riddles and communicate more clearly about the benefits of ICT. Also, companies need to invest in innovation and new technologies if Australia is to build new industries.

Members of the audience from NICTA and CSIRO said they were collaborating on broadband innovation.

Thodey at least has put his money where his mouth is by setting up a $50 million fund to invest in new technologies and applications. He wants to see Australia have its own version of Silicon Valley.

Fund managers and senior management at public companies have started to complain about the undue pressure they are facing because of the turmoil in markets.

At a time when fundamental analysis of stocks is being abandoned in favour of panic selling, fundies and managers are under increasing pressure to deliver value.

This has led to some management teams being put under pressure to do things that they do not believe is in the interests of all shareholders.

The pressure can manifest itself in demands for capital management or forms of corporate activity to unlock value.

Meanwhile, fund managers who use traditional valuation techniques are concerned that share prices are being driven by short selling, high-frequency trading, hedge fund arbitrage activities and other techniques.